Posts Tagged ‘mortgage brokers’

Small Time Crooks Vs. The True Masterminds Of The Economic Collapse

Recently two mortgage brokers and a real estate appraiser in Minneapolis were indicted on fraud charges for allegedly inducing lenders to make more than 1 million dollars in mortgage loans on properties based on false information regarding the properties’ values.

Over and over, we see stories like this play out across the United States, and yet the true criminals, the Wall Street financiers, the orchestrators of the worst economic collapse since the Great Depression, have  gotten away virtually scot-free with their ill gotten gains while the country continues to drown in foreclosures.

Now, I am not saying that the small timers aren’t guilty of fraud nor that they should not be gone after: of course they should. By the same token, Lloyd Blankfein of Goldman Sachs and Jamie Diamond of Chase certainly have dirty hands, and the scope of the fraud these men were involved in numbers in the billions of dollars, if not trillions, at this point.

Every day, I read stories about how the U.S. housing market continues to decline. Every day, I hear about more people losing their homes to foreclosure. Every day, I hear about the millions of unemployed who simply can’t find work because there is none to be had.

Contrast the plight of ordinary Americans with fortunes of the prime Wall Street movers, whose bank accounts are overflowing with cash, mostly owing to their ill-gotten gains made during this time of crisis. How can it be right that the very people who brought down our economy can profit nicely and get away with it?

Sure, some of the small timers, like the guys out in Minneapolis, are getting their just desserts for the crimes they committed, but the true atrocities remain unanswered.

Financial Reform Passes: What Does It Mean For The Average Consumer?

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So the Senate voted today to pass financial reform, a bill aimed chiefly at reining in Wall Street from doing the kinds of things that lead to the financial collapse of 2008. There has been a lot of talk about derivatives  and credit default swaps, and while these are important parts of the reform bill, which ultimately affect each and every one of us, there are other aspects of this bill that will more directly affect average Americans.

The largest of these is the creation of a new consumer watchdog agency known as the Consumer Financial Protection Bureau. This agency will be located within the Federal Reserve but will be completely independent from it. It will have an independent director and will have the authority to make and enforce rules against unfair and deceptive consumer credit practices. This agency will regulate the practices any business that engages in consumer lending, from credit card companies and mortgage lenders to payday loan companies. The one group exempted from CFPB authority are auto dealers.

Basically, what the CFPB will do is make sure that when you sign a credit card agreement, you know exactly what you’re getting into. Even more importantly, it will ensure that if you borrow money, you can do it safely and with the knowledge that you can pay it back without going broke. Hopefully, the CFPB will put an end to the usurious practices of payday lenders, for example.

Finally, the reform bill contains new regulations with respect to mortgage lending.  Lenders will no longer be allowed to pay brokers additional fees for steering borrowers into riskier and more expensive loans if they qualify for cheaper safer ones. It also forces lenders to adopt stricter underwriting standards to ensure that no one receives a loan they can’t afford to repay and it reduces abusive repayment terms like huge prepayment penalties and other “junk” fees.

While the reform bill isn’t as strong as many would like, it does have some good aspects that will help consumers better manage their debt. I hope that Elizabeth Warren is appointed to be the director of the CFPB. 

I’m curious….what do YOU think about the financial reform bill?

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